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Ready To Purchase A Home

Posted on July 29, 2015 by Ray Williams (NMLS #216267).

You may be asking yourself “am I ready to purchase a home?”  If you are like the many of us who have just received a notice from your landlord informing you that your rent is going to raise, and not just by a little but a few hundred dollars.  What do you do and why are the rents rising? The rise is due to Denver’s growing economy and more people moving to Colorado.  This puts landlords in a prime position.  If their current tenant can’t pay the increased rent they will have another tenant waiting in the wings who can. They also know that the Real Estate market is tight and those who are looking to purchase are in a very competitive market and if they can’t find a property to purchase they will be looking for a rental.

What are your options?  You have two choices, keep renting or look to purchase.  If you choose to purchase you need to make sure you are in a position to get pre-approved. You may be asking, “what do I need to do to get in a position to get pre-approved”?

First step is to know your credit score, more specifically your FICO score! This is not the number you get from CreditKarma or possibly even your credit card.  You need to check in with www.myfico.com or go directly to the bureaus, www.experian.com, www.transunion.com, www.equifax.com and retrieve your FICO score.  If you are not wanting to pay for your FICO score than at the very least pull your credit report and review what is reporting.  Is it accurate?  Do you have any collections that you were not aware of? Judgements? Late payments? Etc.  These items are critical to your score and for a pre-approval.  Do you have active, current, good revolving credit?  If you are not aware of any of these you need to get familiar and check on your reports.  Most lenders are unable to provide a pre-approval with a FICO score under 620.

Second step is having some money in savings.  There are down payment assistance programs available BUT these funds do not cover all the costs involved in purchasing a home.  You will need to have funds readily available for earnest money, appraisal, inspection and the remaining closing costs.  Most of the down payment assistance programs require that you have $1000 or 1% of purchase price (whichever is greater) in the transaction.  You can not nor should not be purchasing a home with no money in the bank.

Third step is if you have step #1 & #2 complete then the next step is finding a qualified lender. You want to find someone who can help, guide and educate you in what options are available to you.  If you know you need down payment assistance then this should be one of the first questions you ask.  Not every lender is qualified and approved to work with many of the down payment assistance programs.  Are you looking  for a VA loan? Make sure to ask if they are an experienced lender with VA loans.  These are very important questions.  You don’t want to find yourself completing loan applications, running your credit and submitting financials only to find out that they don’t have the services or loan programs you are needing.  Make sure you also check their credentials.  Ask for past clients that you can reach out to, or check for online reviews with Google, Yelp, FaceBook pages and Better Business Bureau.

If you are new to purchasing a home you should take the homebuyer education courses that are free and available to you, click here for more information. If you have any questions and would like to start the process of getting pre-approved please contact us.

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